Tags: Dalio | Bridgewater | Fed | stimulus

Dalio Says Fed Needs to Print More Money to Help Stocks

Dalio Says Fed Needs to Print More Money to Help Stocks

By    |   Wednesday, 20 January 2016 09:05 AM

Ray Dalio, founder of the world’s biggest hedge fund Bridgewater Associates, said the Federal Reserve needs to start printing money again to lift markets.

"I think a move to a quantitative easing would bolster psychology," he told CNBC's "Squawk Box" at the World Economic Forum in Davos, Switzerland. Quantitative easing is a central bank program to buy government and mortgage debt as a way of pushing down borrowing costs for Congress, businesses and consumers.

The Fed raised rates by 0.25 percentage points in December, the first hike since 2006. Several governors of the central bank have said that more increases are coming this year as the U.S. jobs market reaches full employment.

Under former chairman Ben S. Bernanke, the Fed bought trillions of dollars of Treasurys and mortgage-backed securities from banks, making it the largest creditor to the U.S. government.

Dalio says the market turmoil will have a chilling effect on consumer sentiment and the U.S. economy. The S&P 500 index of the 500 biggest stocks has fallen 8 percent this year as oil prices have continued to slide and China’s economic growth has stalled.

"This will be a negative for the economy, this market movement. The Fed should remain flexible. It's shouldn't be so wedded to a path," Dalio told CNBC. "We're going to have a lower level of growth in six months from now ... about 1.5 percent."

"The risks are asymmetric on the downside, because asset prices are comparatively high at the same time there's not an ability to ease," he said. "That asymmetric risk exists all around the world. So every country in the world needs an easier monetary policy."

Dalio's Bridgewater Associates has $155 billion in assets under management.

Dalio’s Four Recommendations for Policymakers:

  1. Manage debts: i.e., bring debt growth down toward income growth and restructure a lot of debt.
  2. Restructure the economy: i.e., help new businesses and industries replace old businesses and industries.
  3. Develop all forms of capital markets, including making credit, equity and currency markets more efficient.
  4. Manage the pressures on the balance of payments and currency.
Source: CNBC

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Ray Dalio, founder of the world's biggest hedge fund Bridgewater Associates, said the Federal Reserve needs to start printing money again to lift markets.
Dalio, Bridgewater, Fed, stimulus
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2016-05-20
Wednesday, 20 January 2016 09:05 AM
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